College is very expensive, and getting more so every year. This is generally considered worth it, however, due to the increased earning potential a college degree brings with it. But how much expense is worth it? Can colleges guarantee a return on the investment you make? Is a college degree money well spent?
In this article, we’ll go over how to get the best possible return on your college degree, and whether or not college is still a worthwhile investment (spoiler, we think it is). College is a major investment of both time and money, and as with all other investments, you should try to maximize your returns. Let’s get started!
What is College Worth?
According to a study by Georgetown, people with college degrees earn 84% more on average than those with only a high school diploma and 31% more on average than those with an Associate’s degree. This does not mean everyone with a college degree earns a great wage, and indeed the same study found gaps in earnings based on race and gender. That said, average wages for college graduates are significantly higher.
The Bureau of Labor Statistics also released projections for job growth; job openings that require a bachelor’s degree will grow faster than the job market as a whole, as employers increasingly consider a college degree a prerequisite for employment. This does not mean all careers require a degree, but a degree is helpful for finding job openings and is required for an increasing number of fields. Whether or not this is necessary is uncertain, but that is the industrial trend.
Thus we can safely say that getting a college degree gives you greater potential for finding employment and a higher ceiling for potential earnings. This doesn’t mean that college is the only way for you to succeed, and a college degree does not guarantee a career. It merely makes your future success more likely.
What Does College Cost?
This depends, but no matter where you go, the answer is increasingly a lot. The price of a college education has increased at more than twice the rate of inflation over the past few decades. While in-state tuition at public universities is often more reasonable, out-of-state tuition and private schools have increased their costs tremendously, and more students are struggling to afford college.
Attending a top-tier private school will set you back $70,000 per year, more than many people earn. Even more affordable schools can go for $10-15,000 per year. One of the biggest challenges students face is not getting into college, but paying for it once they’re there.
We’ve discussed financial aid before, but most students still end up paying for college with loans. As of the writing of this article, Americans owe $1.7 trillion dollars on student loans. Unlike most loans, these cannot be discharged by bankruptcy; you will continue to owe and have to pay back the money until the balance is settled or you die.
This is why college should be seen as an investment; taking a loan now with the promise of higher earnings in the future. Just as money wisely invested in the stock market will bring safe and steady returns, a well-planned college career will set you up well, while a risky or poorly planned investment can see you making big losses.
How to Get a Good Return on College Investment
Here are our steps for making a good return on your college degree:
- Have a plan.
- Pay as little as possible.
- Make sure you graduate.
- Manage your repayment.
Have a plan
This is the first and most important step. You can major in almost anything and go on to have a fulfilling career, but having an idea of what you want to do will make your transition to post-college life smoother.
Most students do not end up working in a field directly related to their degree. Indeed, most office workers did not major in business or finance, but instead in the humanities or social sciences. The hard and soft skills you pick up in college are widely transferable; this is the value of a college degree.
You don’t have to have a plan going into college, and the plan you do have can change. That said, to maximize your investment, use the resources your college has to construct and further your plan. Colleges have career centers, job fairs, recruitment events, industry connections, and myriad other resources. Make use of these to format or further your own plan. You are paying for these resources, so use them.
Pay as Little as Possible
This is one of the best reasons to apply to multiple schools. You will receive varied financial aid offers; some schools offer nothing, others a bit, and a few may offer you a lot. The name of a school and the attached prestige matter far less than earning a degree at all (with a few exceptions).
Some companies in some fields will only recruit from top schools; Wall Street especially is notorious for this. For most professions, however, the undergraduate institution you attend doesn’t matter very much, getting a degree at all is what’s key.
Therefore, when deciding which school you attend, you want to minimize your own costs, and loans, as much as you possibly can. It’s easier to make a positive rate of return when the amount you have to pay off is lower. We recommend going to the school which offers you the best financial aid package, rather than one which may seem more prestigious.
Make Sure you Graduate
This is fairly self-explanatory as a step. A college degree is only worth something if you get it; almost doesn’t count. There are legitimate reasons to delay or step back from your education, but once you commit to a degree, we strongly recommend you finish it, even if it ends up being at a different institution. Student loans and no degree is the worst situation to find yourself in.
Manage your Repayment
Many student loans begin accruing interest immediately and will charge you interest on the interest you owe. Thus even loans that are small initially can quickly balloon out of control. Make payments on your loans while still in school if possible, to keep the interest from piling too high.
Further, once you have graduated, look into refinancing or forgiveness programs. Privately refinancing your loans allows you to greatly reduce the amount of interest, which in turn greatly reduces how much you have to pay back. Forgiveness programs are offered for many government careers; after a certain tenure of service, your government-held loans will be forgiven.
The eligibility for student loan forgiveness programs is strict, but if you are interested in a career in education or public service, forgiveness is well worth looking into.
Is College Worth it?
Overall, yes. This doesn’t mean every student is best served by attending college, but overall most students will benefit from earning a college degree. Your career prospects will broaden, your earning ceiling will rise, and your horizons will widen.
This doesn’t mean every college is created equal, nor every degree. You should work to make sure your own rate of return is as high as possible. This means taking advantage of every resource you can, planning for your future, and being deliberate with your choices. College is a major investment, but like all investments, it is worth it if you are judicious.
While college is quite expensive, it is an investment worth making. As with any investment, however, you want to maximize your rate of return. Loans can bury you if you aren’t careful, but they can be managed if you work with forethought.
If you want advice on college application strategies to maximize your own rate of return, or have other questions about applying, schedule a free consultation with us. Every student is unique and will need to take a different track to maximize the return on their college investment, and we enjoy helping our students do so.